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Shipbuilder wins 15-year contract

The Ministry of Defence has guaranteed shipbuilding work for the next 15 years to BVT, which operates shipyards on the Clyde and in Portsmouth.

The agreement, worth about £230m a year, comes three weeks after a leaked memo suggested yards could close in 2014 without new orders.

The MoD said it was an "unambiguous commitment" to BVT but it would require "efficiency" improvements.

Unions said it fell short of a guarantee that yards would not close.

A BVT memo, leaked last month, warned that either the Clyde yards or the Portsmouth site might close if new work was not secured after the completion of two giant aircraft carriers for the Royal Navy.

The company's chief executive wrote that the UK government was willing to pay up to £165m for the costs of closure, including redundancies and environmental clean-up.

The disclosure led to emergency talks between Scottish Secretary Jim Murphy and BVT.

'Bright' future

Commenting on the new agreement, Mr Murphy said it provided a "bright and brilliant future for shipbuilding on the Clyde".

"It also gives the industry the framework it needs to plan confidently for the future," he added.

"That means jobs and it means skills for Scotland and it is great news, especially coming at a time of economic uncertainty."

The MoD said the new business agreement gave an "unambiguous commitment to the company for a certain minimal level of workload" in return for retaining the skills and capacity necessary for future shipbuilding.

But it added that efficiencies would be required and said BVT had promised "the transformation of the sector into a sustainable entity for the future".

This is intended to generate at least £350m of savings over the course of the 15-year contract.

According to leaked documents, the likely order book after the carriers is to build 18 ships to two designs, which can then be adapted for export orders.

'Still unclear'

Jamie Webster, convener at BVT's Govan yard, said he was concerned at how the "efficiencies" would be achieved.

He said it was still unclear how many shipyards would be operated by BVT once the carrier work was finished.

Alan Johnston, chief executive of BVT, said the agreement was a "hugely significant" development for shipbuilding.

He said: "It will ensure that we can affordably deliver key capability to the Royal Navy in this country for many years to come, strengthen our competitiveness in the international market, and deliver security to the shipyards that has not been known for decades."

The MoD forced the merger last year of the two main builders of the Royal Navy's more complex ships - BAE Systems and VT, formerly Vosper Thorneycroft.

BVT has sites in Govan, Scotstoun, Portsmouth and Bristol, and a combined workforce of 7,000.